The New Villian in Tech

**Dan Boyd** (0:00)
I see you.

**Lou Whiteman** (0:02)
Avatar Fire and Ash is now streaming on Disney+. It's the film critics are calling the best Avatar yet.

**Jon Quast** (0:09)
Go, go, go, go!

**Lou Whiteman** (0:09)
A true epic and completely jaw-dropping. This is the only pure thing in this world. Return to Pandora on Disney+.

**Travis Hoium** (0:17)
It will be an adventure for the whole family.

**Lou Whiteman** (0:19)
And watch the Oscar-winning phenomenon at home.

**Jon Quast** (0:22)
This is sick!

**Lou Whiteman** (0:26)
Avatar Fire and Ash, now streaming on Disney+.

**Jon Quast** (0:28)
Rated PG-13.

**Travis Hoium** (0:32)
Is AI the new villain on Main Street? Motley Fool Hidden Gems Investing starts now.
Welcome to Motley Fool Hidden Gems Investing. I'm Travis Hoium, joined today by Lou Whiteman and Jon Quast. And guys, the big story of the week. I think we have to start with Apple. They've raised prices and this is partly an Apple story, Lou. You know, I'm looking for a new computer. I'd love to get one of those Mac studios and they get the new processors supposed to come out in the next few months. But the prices just went up and they went up a significant amount. What in the world is going on?

**Lou Whiteman** (1:07)
Yeah, Tim Cook got that job because he was the supply chain guru. And he says he's never seen anything like this in 40 years. The problem is memory costs. And that's all about AI.
As Travis said, Apple just announced a huge across-the-board price hike.
Memory is the culprit here. We know data centers need Nvidia chips, but they also need a lot of other things, including memory. And they are devouring the supply of the world's new memory. Simple laws of supply and demand are kicking in, and it's raising prices for everyone. The reality here is even worse because AI wants a special kind of memory, and companies like Micron are racing to make that and not the memory for phones just because it's higher margin. But that's the idea. There is just suddenly a ton of demand and demand from rich pockets, and it is affecting prices in a big way.

**Travis Hoium** (1:57)
Yeah, Jon, this seems like one of these things where AI doesn't necessarily spill over onto Main Street. When I take my kids to sports, AI is not something that generally comes up.
But now it's just starting to spill into things that we spend money on. When you go to buy the next generation iPhone, if that's the phone you use or lose Pixel, you are going to see higher prices, and that's something where it almost seems like Silicon Valley in general, because it's Silicon Valley driving all of this demand for AI stuff, is going to make themselves the villain. We're already having enough trouble building data centers. Now people are going to be mad about smartphone prices.

**Jon Quast** (2:37)
To quote the mad Titan Thanos here, dread it, run from it, destiny arrives all the same.
Yeah, I mean, last I checked, these companies aren't really asking my opinion on the changes that they're making to their products or their pricing. I'm still protesting the getting away with the headphone jack. I still want the headphone jack in my phone and they didn't ask me about taking that away. No, the thing is, I mean, yeah, the prices are going up and as you mentioned, I mean, Travis, you're talking about the new Mac Studio coming out, but the big thing here is that these prices are going up on existing products. They're not going up on the next generation.
Yeah, this is the stuff that's out now. The prices just got hiked. So that is very interesting. It is possible that consumers are going to be very confused about this, but I don't know what consumers can do about this. They vote with their dollars, but there's not another candidate on the ballot here. The prices are going up across the board because memory itself is going up, and that's not an Apple problem, and there's really not much that Apple can do about it.

**Travis Hoium** (3:38)
Yeah. Lou, this does seem like it isn't an Apple problem. I think that Tim Cook and team, you're right, maybe they could have seen this ahead of time, but also memory is a commodity. How is has been a commodity. Commodities do go through these boom and bust cycles. This reminds me a little bit of Rare Earths. If you might remember that from about a decade ago when Rare Earth prices went crazy and we thought, you know what, we're not going to be able to make EVs anymore.